We are in the midst of an hour long tribute to Ludwig von Mises, one of the great economists of all time.
First Richard Eberling. Dealt with the sweeping conditions of the human condition, money in a market economy, the business cycle and the working of competitive markets. Not a university professor but was the economist for the Austrian Chamber of Commerce (as I was the economist for the Australian Chamber of Commerce). Dealt with policy considerations which required him to invent theory to shed light on what needed to be done given the circumstances of his time. In science, he said, compromise is impossible, but in policy a necessity. His aim was to institute a liberal social order.
His views on deficit spending: during WWI wrote that the spending cannot be shifted to the future. But if in the circumstances of war, better to borrow than to tax to finance deficits that he saw as inevitable. Also understood that taxes should be on consumption rather than on production (as anyone raised in the classical tradition would have understood). (So different from tax policy in our own day and age.)
Sought to overturn two normally accepted ideas that were common during the 1930s. First, that there should be no constraint on public expenditure. Then secondly, also in the 190s, sought to overturn the idea that there are certain entitlements that cannot be reduced. But the aim in all his proposals was towards the long-run destination of a free and liberal society.
Eberling lastly mentions that he himself has just seen into print 1000 additional pages of writing by Mises that he had just discovered in an archive in Russia that have never till now seen the light of day, or at least in English. Published by the Liberty Fund.
Second speaker who has written a biography of Mises (didn’t catch the name). Mises’ importance can be seen that in every year in the last ten years there has been a Mises Institute set up somewhere in the world.
In his books, Mises never published anything that contained any kind of compromise. His first great article was on socialist calculation. How can socialism be more productive than capitalism if there are no prices to determine relative costs of production, a problem with no solution. Mises denied there was any third way. Every third way attempt would remain inherently unstable. Only 100% capitalism was viable. This message resonated with the old liberals but was not embraced by the younger generation who had been raised in a more socialist-leaning environment. They sought a third way that led to an institutional framework and a creed of neo-liberalism. Leave business alone to produce but re-distribute after. Henry Simons of the University of Chicago was the spokesman of this view. Sought forms of regulation and minimum wages. Very non-Misean. Could improve both fairness and efficiency, ideas relentlessly criticised by Mises.
The speaker I might add went ten minutes over time! So against the notion of contract.
Now off to a cocktail party at the residence of the Lord Mayor of Prague.
The biographer was almost certainly Jorg Guido Hulsmann. No wonder he went overtime, the book runs to 1100 pages. A great read but, check out this commentary, also it has big print and wide margins to there are no more words than Malachi Hacohen’s 650 page book on the other sleeping giant of 20th century liberalism, Karl Popper.
Poor Old Rafe
5 Sep 12 at 8:02 am
It’s not the social aspect of socialism that annoys me so much, but the pretending that it is good economics. Sure, try and justify a cost on social grounds, just don’t pretend it has economic benefit when it’s an economic cost.
Twodogs
5 Sep 12 at 9:11 am
I am interested in understanding this, but as I am working through Rothbardt’s Economics before Adam Smith (between work & all other commitments) I can’t see myself getting to von Mises too soon.
It would be worthwhile creating some posts to explore this in the future.
Token
5 Sep 12 at 10:01 am
Whatever you do when you get to Mises, don’t read all of the first 200 pages of methodological preliminaries to Human Action.
Start with somehing simple like The Anti-Capitalist Mentality.
All the Mises book and also the Hulsmann book can be read on line from the Mises Institute site.
Poor Old Rafe
5 Sep 12 at 11:08 am
Thanks Rafe.
That’s where I am getting my reading from thanks to the links you and Steve K have provided in the past.
Token
5 Sep 12 at 1:32 pm
If you call corporatism (as is now the system in the US) capitalism then there are likely to be some pretty disturbing misinterpretations flowing from Mises views here but of course Mises isnt around to interpret todays economic environment seeing as he died in 1973.
Alice
5 Sep 12 at 2:24 pm
Mises was a very close observer of corporatism. Nobody who reads him well be in doubt about the difference between the market order of catitalism that he defended and the various exploitive abberations produced by government intervention. Especially the partnership of government and business or government and trade unions to promote sectional iterests at the expense of the community at large. As we see at present with the relationship between the ALP and the trade unions.
They also tried it with big busines when they got cosy with the big Three miners and left the others out of the loop of consultation.
Poor Old Rafe
5 Sep 12 at 3:48 pm
The high tide of corporatism is also known as fascism in the technical sense (leaving out death camps and genocide which were incidental features of the Nazi version). Fascism is a partnership between Government, Big Business and Organized Labor. The US New Deal was the same thing. It can happen in a democracy, as indeed it happened in Italy, Germany and the US.
Poor Old Rafe
5 Sep 12 at 3:54 pm
when researching some Lou Rockwell smears of the memory of Milton Friedman, I looked at a post by Richard Ebeling on Mises as a policy adviser using those lost Moscow papers. Mises was rather practical.
From http://mises.org/daily/4189/The-Other-Ludwig-von-Mises-EconomicPolicy-Advocate-in-an-Interventionist-World by Richard Ebeling
From 1909 to 1934 (except during the First World War), Mises worked as an economic-policy advisor to the Vienna Chamber of Commerce. As Ebeling notes:
“What comes out from reading Mises’s policy writings from this period of his European career is that if you had asked him a fiscal, or monetary, or regulatory-policy question in the context of his role as analyst at the Chamber of Commerce, he would not have said, and did not simply say, “laissez-faire” — abolish the central bank, deregulate the economy, and eliminate taxes.
In the give-and-take of everyday Austrian politics and policy decision-making, Mises accepts that there are certain institutional “givens” that must be taken for granted, and in the context of which policy options and decisions must be worked out.”
Ebeling went on to note that Mises seemed to think in three policy horizons:
1. The most optimal institutional and policy arrangements in society for the fostering of the classical-liberal ideal of freedom and prosperity, based on the knowledge that he thought sound economic theory could provide;
2. the actual circumstances of the present, but focused on the intermediary goals that would be leading in the direction of that more distant, “optimal” horizon; and
3. current situation and the immediate future
In the 1970s, Rothbard criticized Milton Friedman for advocating indexation of prices and wages as a method to reduce some of the negative effects from an ongoing inflation. In 1922, during the worsening Great Austrian Inflation, Mises proposed indexation of wages and prices.
Mises did not just say cut bureaucracy and its spider’s web of regulatory controls.
Ebeling explained Mises as follows:
• what was inefficient and unnecessary in the three-tiered Austrian bureaucratic system of federal, provincial, and municipal regulators and taxing authorities;
• what specific reforms should be introduced, how they could be experimented with in smaller regions of Austria; and
• how best to overcome the resistance of those in the bureaucracy fearful of losing their jobs
Ebeling ends by saying:
• “Even as that uncompromising and principled proponent of individual liberty and the free market, Mises was called upon in his role as policy analyst and advocate to sometimes devise “second-” and “third-best” policy proposals in an imperfect world dominated by collectivist and interventionist ideas and practices.”
• “for those who have sometimes asked, “Well, but how do you apply Austrian Economics to the ‘real world’ of public policy?” here is the answer by the economist who has been considered the most original, thoroughgoing, and uncompromising member of the Austrian School over the last one hundred years! His policy analyses provide us with warning signs and guideposts to assist us in thinking about and designing better policies for our own time.”
Jim Rose
5 Sep 12 at 6:23 pm
For Mises to be great, he must be at least well-known. The Mises Institute has fulfilled its mission in getting attention for Mises and his ideas from the 1990s onwards; credit to GMU economics too.
Face up to it, under the how to stuff up a job interview in one name-drop test, Mises would be far less likely to end your chances than the mention of Hayek or Friedman.
Mentioning Friedman’s name in the 1980s at job interviews would have been extremely career limiting. Not much better in the early 1990s.
Back in the 1980s, the much less radical Milton Friedman was just graduating from being ‘a wild man in the wings’ to just a suspicious character in policy circles.
If you name dropped Hayek in the 1980s and 1990s, any sign of name recognition would have indicated that you were been interviewed by educated people.
Mentioning Mises would have gone straight through to the keeper back then.
p.s. I tried to find 1992 obituaries for Hayek. Most were very short. His son’s obituary in 2006 was much longer mostly on the back of who his now very famous father was.
Jim Rose
6 Sep 12 at 6:43 am